What is Unit Linked Health Plan(ULHP)? Advantages & Disadvantages

A health insurance plan acts as a financial cushion should you need medical attention that leads to hospitalization. However, while paying your health insurance premiums, you may wonder what if you don’t need hospitalization ever and all the premiums you have paid turn out to be just another expense made out of fear?What if we told you that there exists a health insurance plan that could extensively cover your medical expenses while also generating a return on investment? Unit Linked Health Plans (ULHPs) are just that.

1. Here your premium amount is put into three financial baskets:

• The first part goes to a basket dedicated to medical claims. The size of this slice depends on the medical coverage you opt for.
• The second part goes into the mortality basket. This portion is for securing a sum assured which your nominee will get in case of your demise.
• The third part goes into the investment basket. You can use this portion to invest in funds of your choice or give permission to the insurance company to invest in their best performing fund. This fund can be pure equity or a mix of debt and equity.

2. In case of a claim related to the health insurance part, the insurance provider will cover your medical expenses, provided your claim meets with their pre-requisites.3. After five years of continuing the policy, you will have the option to take out the returns that have been generated from the investment part of your policy while keeping the health cover part intact.4. Depending on your ULHP, after a certain time period, the policy will mature and you will receive the fund value the investment part has reached at that point of time.

There are always some ancillary costs or pre-existing conditions for which your health insurance will not pay. In that case, you can use a part of your fund value to meet those expenses without having to touch your savings.

The premiums for ULHPs are higher than standard health insurance plans. Also, irrespective of your fund value, the insurance company will deduct administrative charges, fund manager’s fee and premium allocation charges from your returns.If you procure a Unit Linked Health Plan to stay invested for a long-term period, it may turn out to be more fruitful than a regular health insurance plan. You will realise that you are getting more returns than you had invested, essentially making your health expenses nil. Unlike other health plans, ULHPs give you a maturity value along with protecting your finances during medical emergencies.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.